HOUSTON (ICIS)--US August sales of new light vehicles fell sharply from July and remain well below volumes from the same month a year ago, as the industry continues to face headwinds from strained supply chains and a global shortage of semiconductors.
The parts shortages have forced automakers to scale back production, which in turn has led to lower inventories on dealer lots, which has also dented sales.
Patrick Manzi, chief economist for the National Automobile Dealers Association (NADA), said the ongoing issues are likely to continue weighing on the industry for the rest of the year.
“Unfortunately, given the recent production-cut announcements for September and other ongoing supply chain disruptions, we expect little change to inventory levels next month,” Manzi said.
According to seasonally adjusted annual rates (SAAR) from the US Bureau of Economic Analysis (BEA), sales fell by 10.7% from the previous month and by 14.4% from the same month a year ago.
However, a more accurate comparison is to August of 2019, which was before the coronavirus pandemic arrived and led to mitigation efforts that shut down global economies.
Sales are down by more than 23% from August 2019 - seasonally adjusted - and are down by over 33% on an unadjusted basis.
This month’s data paints an even more dire picture as August is typically a peak sales month as manufacturers launch promotional events to clear inventories of outgoing model-year vehicles and begin sales of the new model year.
The automotive industry is a major global consumer of petrochemicals which contributes more than a third of the raw material costs of an average vehicle, and production disruptions could severely weigh on demand.
The automotive sector drives demand for chemicals such as polypropylene (PP), along with nylon, polystyrene (PS), styrene butadiene rubber (SBR), polyurethanes and methyl methacrylate (MMA)/polymethyl methacrylate (PMMA).